Markets rebounded after a rough start to the week with the S&P 500 finishing nearly 2% higher for the week.
Economic data was relatively light but a dense earnings calendar and an update from Tesla kept markets interesting. Big Canadian banks and retailers highlighted the earnings week with other big names including AMC Entertainment and Salesforce.
Tesla Master Plan
Tesla (TSLA) disappointed investors with its big Master Plan Part 3 reveal which notably did not includee a next-generation vehicle and instead focused on recent production benchmarks. Tesla shares fell roughly 8% following the announcement but managed to recover most of those losses by the end of the week.
The disappointment in the lack of a new vehicle is understandable but also made sense for Tesla to avoid announcing a Model 2 (nicknamed Model Tau) due to its focus on profitability in recent years. Tesla has been attempting to bring its prices down on the Model 3 in order to compete with its EV competitors that have massive economies of scale such as General Motors (GM) and Ford (F).
Recent price drops and more trim levels qualifying for EV tax credits have helped Tesla's market share recently and unveiling a new model with an unspecified release date would only lower demand for its current offerings. The automotive and technology company may have disappointed on the innovative tech side but actual benchmarks for its manufacturing have been solid for the automotive part of the business.
Light Data Week
A light week for economic data was highlighted by consumer confidence, durable orders, and unemployment claims reports. Durable orders fell more than expected with orders dropping 4.5% in January following a 5.1% gain in December, analysts had projected a 3.9% decline. Meanwhile, consumer confidence fell from a reading of 106.0 to 102.9, far below the expectations for a rise to a reading of 108.4. Lastly, initial unemployment claims came in lower than expected with 190,000 initial jobless claims as analysts predicted a rise from 192,000 to 197,000 claims.
Earnings Wrap-Up
Canadian banks earlier in the week reported earnings results with Toronto-Dominion (TD), Bank of Montreal (BMO), and Royal Bank of Canada (RY) all surpassing earnings results while Bank of Nova Scotia (BNS) missed on earnings and revenue projections (Bank of Montreal also missed revenue estimates).
Meanwhile, large retailers Costco (COST) and Target (TGT) each surpassed earnings estimates but Costco missed on revenue predictions as it experiences slowing demand of discretionary goods. To go along with those trends in discretionary spending, Macy’s (M), Kohl’s (KSS) and Nordstrom (JWN) also missed revenue estimates as apparel retailers continue to struggle.
Other highlights included Salesforce (CRM) shares rising more than 10% after its earnings and revenue beat coupled with a strong forecast and expansion of its share buyback program. Additionally, AMC shares fell following a slight earnings beat but revenue miss as the CEO urged shareholders to approve an increase of authorized common shares so that APE units can be converted into common shares.
All in all, the S&P 500 rose 1.90%, the Dow Jones Industrial Average gained 1.75%, and the NASDAQ increased 2.58%.
